Background
For some time there has been a perception that the UK is a safe refuge for corrupt individuals seeking to conceal their unlawfully acquired assets. This has particularly been the case with regard to persons from countries outside the UK.
The Government has sought to address this by amending the Proceeds of Crime Act 2002 (‘POCA’) through the insertion of a new investigative power, which fits in with the existing civil recovery scheme under POCA.
The Power
On application by a designated enforcement authority, the UK High Court may make an Unexplained Wealth Order (‘UWO’) in circumstances where it appears that a person’s possession of assets is disproportionate to their known income.
Conditions for the making of a UWO
Before such an order is made, the High Court must be satisfied that the following conditions have been met:
- There is reasonable cause to believe that the respondent holds the property and that the value of the property is greater than £50,000.
- There are reasonable grounds for suspecting that the known source of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property.
- The respondent is a politically exposed person, or there are reasonable grounds for suspecting that the respondent or, a person connected with the respondent, is or has been involved in serious crime, whether in the UK or elsewhere [s.362B]
Note 1: A ‘politically exposed person’ is (a) an individual who is, or has been, entrusted with prominent public functions by an international organization or by a State other than the UK or another EEA State, or (b) a family member of such a person, or a known associate of or connected with such a person [s.362B(7)].
Note 2: A person is ‘involved in serious crime’ if so involved for the purposes of Part 1 of the Serious Crime Act 2007 [s.362B(9)]. This will embrace offences such as money laundering and bribery.
The Effect of a UWO
Such an order requires a respondent to provide a statement within a period specified by the court which (i) sets out the nature and extent of their interest in the relevant property, and (ii) explains how the property was obtained [s.362A(3)
Failure to comply with a UWO
If without reasonable excuse a respondent fails to comply with such an order, the property concerned is presumed to be recoverable property for the purpose of any proceedings taken in respect of the property under Part 5 of POCA (which covers civil recovery of the proceeds of unlawful conduct), unless the contrary is shown [s.362C(2)]
Offence
A person commits an offence if, in purported compliance with a requirement imposed by such an order, they knowingly or recklessly make a statement which is false or misleading in a material particular. Conviction may result in a sentence of imprisonment for up to 2 years on indictment or a fine or both. [s.362E]
Interim Freezing Order
Where a UWO has been made, and on application by a designated enforcement authority, the UK High Court may make an Interim Freezing Order, if it considers it necessary to do so in order to avoid the risk of a person disposing of the property concerned before complying with the terms of the order [s.362J].
External Assistance
If the High Court makes a UWO, or if an Interim Freezing Order has effect in respect of any property and it is believed that the property is in a country outside the UK, a request may be made via the Secretary of State to the government of the receiving country to prevent any person from dealing with the property concerned [ss. 362S and T].
Implications of a UWO
- A UWO is a civil measure laid against property. It is not a criminal measure taken against an individual.
- Its use is confined to illicit assets owned by foreign government officials (as defined) or those with links to serious crime (as defined).
- A reasonable level of evidence is required before the making of an application for such an order.
- Approval is required at a high judicial level (High Court Judge).
Potential concerns
- Undue influence by the State in the private property rights of individuals.
- Reversal of the ‘burden of proof’ principle.
- Risk that in due course the provision may be given wider scope outside the category of ‘serious crime’.
Comment
While the concerns expressed above are legitimate, they have to be balanced against the international need to make it difficult for those involved in serious crime to secrete their ill-gotten gains, often to the detriment of the citizens of their countries of origin.